Amtrak's Self-Sufficiency
Doubted

Updated

WASHINGTON (AP) -- Amtrak is on pace toward a cash deficit of more than
$300 million in 2003, the year by which it must wean itself from federal
subsidies, a new government report concludes.

The findings of the Transportation Department's inspector general may fuel
efforts to plan a wholesale restructuring of Amtrak's operations. But
Amtrak supporters say the inspector general's report does not reflect budget
reforms recently put in place to achieve the goal of self-sufficiency in 2003.

The 1997 Amtrak Reform and Accountability Act prohibited Amtrak from using
any federal funds for operating expenses after fiscal 2002. Since its creation
in 1971, Amtrak has received at least $21.8 billion in operating and capital
subsidies from the federal government.

Amtrak's governing board has a plan to fund its deficit in 2003 through
short-term borrowing, changes in its overhaul schedule and other steps. But the
inspector general's report released Tuesday concludes that ``several of
Amtrak's financial projections are at risk of not being achieved.''

The report says the railway's cash deficit in 2003 will range from $304
million to $535 million. Where Amtrak projects an overall cash loss of $2.1
billion from 1999 to 2003, the inspector general projects a $2.9 billion
loss.

The biggest single disagreement between the railway and the inspector
general involves increased income from high-speed rail service in Amtrak's
Northeast Corridor, stretching from Washington to Boston. The inspector general
agrees that high-speed rail will mean more passengers and more money for Amtrak,
but not as soon as the railway envisions.

In a written statement, Amtrak said it was ``encouraged by many of the
findings'' such as an endorsement of the corporation's current accounting,
financial reporting and bidding procedures.

But it noted that some reforms instituted by Amtrak's new board of
directors were too recent to be reflected in the report. For instance, the Amtrak
board has identified more than $390 million in cost-cutting and revenue-raising
measures over five years.

Amtrak spokesman John Wolf said the railway remains on track to be self-
sufficient in 2003, as demanded by Congress.

The inspector general's report has some good news for Amtrak. The railway's
revenue grew at a faster rate than its expenses from 1992 to 1998, and
ridership rose between 1996 and 1998.

In the most recent fiscal year, Amtrak's ridership experienced the largest
leap in a decade, with a 4.5 percent increase, and topped the $1 billion
mark in passenger revenue for the first time in its 27-year history.
Still, preparations are under way in case it fails to meet its deadline for
self-sufficiency.

A separate panel already at work, the Amtrak Reform Council, is charged
with developing a plan for a restructured intercity railroad if it concludes
Amtrak will not meet its financial goals. A council member, Joseph Vranich, said
the inspector general's conclusions are an important sign that Amtrak will not
meet the goals.

Vranich, a former Amtrak spokesman who wrote a book advocating the gradual
liquidation of the railway, also said the inspector general's report
understates Amtrak's federal subsidies through the years.